Indian IT’s ambition to hit $300 billion in revenues by 2020 could be a tad over-ambitious, analysts and industry consultants believe, as for one it entails an average growth rate that is higher than the upper end of the range Nasscom’s forecast.

As global firms undergo rapid changes, with accelerated adoption of emerging technologies and business models, the Indian companies’ preponderance on IT outsourcing means they need to ramp up offerings in the new areas while continuing to keep their bread-and-butter work. Vendor executives, industry analysts and customers indicate a better spending environment in CY14 as reflected in Nasscom’s higher IT services and BPO exports growth estimate of 13-15 %. Most of this growth acceleration is likely to come from application modernization and emerging technologies (also called digital technologies). While 13-15 % growth in FY15 appears realistic, the sustainable growth rate over FY14-20 is likely to be somewhere closer to the lower end of the range. In other words, the industry is unlikely to hit the $300-billion mark in that time frame, unless it accelerates significantly.

IT has potential to reach $221 billion

The core of the business, services , is unlikely to look the same in the next seven years, and a focus on intellectual property, especially in digital technologies, could be the key to success. Indian companies in general are widely believed to invest a lot less in their R&D in comparison with those in the West, even within the services business. KPMG estimated that the industry could potentially reach $221 billion in revenue by 2020, a gap of $79 billion to the Nasscom target.

Not everyone agrees that the target is unachievable, Nasscom has been getting it predictions right for the last many years. So given their track record, the IT industry should be able to achieve $300 billion revenues by 2020. In the near term, buffeted by two years of very slow growth, the Indian IT industry is concentrating on winning re-bid contracts, as global corporations continue to look for cost-cutting options and offshore more work. The Indian companies are also adding business in managing computer systems and storage networks, called infrastructure management in the industry.

They run the risk of not investing enough in digital technologies and high-end consulting, an area where companies such as Accenture are more self-assured. The Indian services industry being still ill-equipped for the digital transformation wave that is about to be unleashed on organizations as they try to fulfill the customer engagement lifecycle. The rise of Big data, social media, and other emerging digital initiatives need a good look to capitalize.

Most Indian centric service providers are still focused on back-end services around F&A and HR and ERP services. There is huge need to make changes to their business model and invest in things like building consulting, there is such an opportunity open, but it is not easy for India pure play firms, some have failed in this endeavor earlier. If they can compete with the Big 3 in US and in Europe crossing 300B by 2020 is not a huge milestone.

The are some headwinds like political instability, threat of taxation, inflation, rising wages, Visa issues, upgrading education system to get more employable variety of IT pros which pose bottlenecks as well to achieve this ambitious growth.